Telecorruption in Haiti

Peace Corps Volunteers rapidly learn the difficulties of making a simple phone call. As late as 2000, this usually meant going to the local chapter of the state-owned telephone monopoly known as Teleco. Provided that the station worked, and it would often be down for months, one would walk in and call an operator in Port au Prince. The operator would then patch you through collect or you could punch in a phone card. Sounds simple but the process could take the better part of an afternoon in some rural locations. The cost for making a simple call could be sky high.

Services did not improve during my stay in Haiti from 2000 to 2002. In fact, they only got worse. However, there was clearly a market for alternatives. Haitians are family oriented and one would be hard pressed to find a Haitian family without relatives living elsewhere whether they are in the United States, Canada, or the Dominican Republic. In this age of hyper-connectedness, consider for a moment what it would be like to go months without talking to loved ones. With Teleco as your only means of communication, this would often be the case.

Internet access spread like wildfire. In 2000, there were two internet cafes in Port au Prince. One was geared toward foreign expats and was expensive. There was another which was more reasonable, but far beyond the affordability of your average Haitian. By the time I left in 2002, it would not be a stretch to say that there were at a minimum 100 cybercafés (if one counts an internet connected computer available for rent as a cybercafé) in Port au Prince alone. Internet cafes also popped up in Cap Haitian, Hinche, Les Cayes, and many other cities. Mike Gama Lobo, a Peace Corps volunteer with a flair for IT, helped to establish one in a small village in the south.

This was not without resistance from the government. Internet cafes began to be used for telephony, as a means to bypass the state owned monopoly. Telephony was promptly declared illegal, and was pushed underground (read: in a room in the back). I cannot confirm this but had been told that the government raided the headquarters of an internet provider and confiscated the equipment (as it suspected people were using internet access for Telephony). What they had not realized is that the government emails were on this server, cutting off their own access. What I can confirm though is that the Teleco trucks would sometimes deliver tires to strategic locations so that they could be stacked up and burned during pro-government protests.

After 2002, cell phones began to become more popular....no mean feat in a country that is mostly mountainous. I have never used a cell so cannot report on the quality and efficiency, but can say that it is now an option for those who can afford it.

The Teleco building itself is the largest building in Port Au Prince, being perhaps seven stories tall. You are probably beginning to get a sense that it was not the most accountable institution in the country. Rumors abounded that Aristide and allies were benefiting from Teleco revenues. Less often one would hear that American companies were benefiting.

This article caught my eye as it suggests American complicity with corruption at Teleco. Sadly, it is not the first time we've supported institutional corruption in Haiti. With the media being aware of this issue, it is likely to garner more attention. We will provide you with continued updates. Please free to comment on this article or to just vent your frustration if you have ever tried to place a call through Teleco.

The Haiti File
By MARY ANASTASIA O'GRADY
February 12, 2007; WSJ Opinion Page A14

A government file pertinent to two civil law suits alleging bribery doesn't just get up and walk out of a supposedly secure federal-agency record room in Washington. When said bribery allegations involve politically influential individuals on both sides of the aisle and a notoriously corrupt former Haitian president that the U.S. supported for a decade, it's even more troubling.

In a December email to a lawyer in one of the law suits, the Federal Communications Commission said that its "Haiti file" was missing. The file is the record of which U.S. telecom companies that did business with the government of former Haitian President Jean Bertrand Aristide actually complied with U.S. law by submitting their contracts to the FCC.

An official at the commission told me on Friday that "we don't have the file but we are continuing our active efforts to locate it."

I'm not sure whether the missing file would fit into Sandy Berger's socks. But given the number of political heavyweights -- both Republican and Democrat -- who might welcome the disappearance of these documents, it's a bit difficult to write the whole thing off as an accident.

Since 2000 I have followed allegations that Haiti's Mr. Aristide took bribes from U.S. telecom carriers doing business in his country. These charges arose first in conversations with Haitians familiar with operations at the state-owned phone company, Teleco. More recently they have been aired in two separate civil suits filed in two different U.S. federal courts.

The alleged quid pro quo for the U.S. companies that agreed to pay the bribes was access to the Teleco network at rates below the uniform "international settlement rate" set by the FCC. During the course of my investigations, two different long-distance suppliers told me that Teleco officials offered them just such a special rate in exchange for payment made to specially designated accounts.

If the allegations are true, it would mean that the Foreign Corrupt Practices Act was violated, right under the nose of the FCC and the Department of Justice, during Democratic and Republican administrations. It would also mean that while Haitians were placing their trust in Uncle Sam to help them construct a democracy, millions of dollars that might have gone to building an infrastructure were siphoned off by a corrupt tyrant and U.S. business partners with friends in high places.

In 2000, questions arose about Fusion Telecommunications, which had a concession to terminate calls in Haiti and which, according to sources, had an office inside Teleco. Marvin Rosen (finance chairman for the Democratic National Committee from September 1995 until January 1997), former Democratic Congressman Joseph P. Kennedy II, and Bill Clinton confidante Thomas (Mack) McLarty III were all on the board of Fusion. Mr. Rosen was Fusion chief executive officer.

Rumors abounded in Haiti that Fusion had a sweetheart deal with Mr. Aristide that gave the U.S. firm rates well below the international settlement rate. When I inquired about the company's Haiti business while preparing a Jan. 2001 op-ed, I was immediately referred to a company lawyer who refused to either confirm or deny that the company was even doing business in Haiti. In September 2005, Fusion told me it had always filed what was required at the FCC and denied making any illegal payments to Teleco.

In 2001 Mr. Kennedy's office released a statement that he had no "joint venture, partnership or business arrangement with the president of Haiti or for that matter, anyone in Haiti" and that he was not involved in running Fusion. Nevertheless, in a Feb. 7, 2001 op-ed in the Boston Globe, he wrote, "I was proud to help bring more than $1 million in private investment from Fusion into Haiti." That was peanuts when you consider that Teleco once had annual revenues upwards of $60 million. By the time Mr. Aristide was forced into exile by a political uprising in 2004, the company was losing money.

The whole thing might have been swept under the rug if it weren't for Michael Jewett, who in 2003 had been an employee at New Jersey-based IDT, headed by former Republican congressman Jim Courter. Like Fusion, IDT had a number of seasoned politicos on its board.

In March 2004 Mr. Jewett filed suit in federal court in Newark, N.J. alleging that he was fired from IDT because he objected to an illegal deal between the company and Mr. Aristide. Mr. Jewett's allegations seem to echo the charges swirling around Fusion. IDT responded much like Fusion, insisting that its arrangement with Haiti Teleco was a trade secret. In fact, IDT had a legal obligation to make its arrangement public and the information was unsealed, revealing that IDT had been granted a rate of nine cents per minute versus the FCC mandated rate of 23 cents.

Mr. Jewett also claims in court documents that IDT agreed to make payments to an offshore account in Turks and Caicos called "Mount Salem," ("Mont Salem" in French) for the benefit of Mr. Aristide.

After Mr. Aristide was driven from power in February 2004, the interim government pried open Teleco's books and alleged that the company had been looted. In November 2005 it filed suit in U.S. district court in southern Florida. "The fraudulent scheme to steal Teleco revenues was carried out in part through defendant Mont Salem," the government claimed, adding that, "At Aristide's direction, Inevil, Duperval and Beliard [Haitian nationals] directed at least two of the Class B carriers, IDT and Skytel, to make their payments for Teleco's services to Mont Salem. At Aristide's direction, Teleco's then-counsel also caused Teleco to request at least one other Class B carrier, Fusion, to make payments through Mont Salem."

Mr. Jewett's case has already revealed a lot, but it won't tell Haitians where millions of dollars in lost Teleco revenues went throughout the 1990s. That will require a more thorough airing, such as the civil suit Haiti filed in Florida. Unfortunately, Haiti has had to withdraw its suit for lack of funds. Its request for a share of assets forfeited by Haitian drug kingpins -- which could be used to reinstate the suit and pay legal fees -- has been resisted by the DOJ. First DOJ said it couldn't release the assets because the cases were on appeal. Now it says that it doesn't yet have the forfeited assets.

Another way to get at the truth would be if DOJ used the mountain of evidence it seems to be sitting on to indict Mr. Aristide, since he has often asserted that he won't remain silent about his dealings with highly placed American politicians if he is brought to trial. Why the DOJ would turn down an offer like that is a mystery, a little like the missing file.